Nasdaq 100 Climbs on Tesla Gains, But US Stock Market Faces Yield Pressures

Tesla Surge Boosts Nasdaq; Dow and S&P 500 Weighed Down by Earnings and Rising Yields

The Nasdaq surged on Thursday, powered by Tesla’s strong earnings report, while the Dow Jones Industrial Average and S&P 500 struggled under the weight of weak earnings and rising Treasury yields. Tesla’s third-quarter results, which beat expectations and forecast significant growth for next year, propelled its stock 19% higher, lifting broader market sentiment.

At 13:16 GMT, the Dow Jones Industrial Average is trading 42347.04, down 167.91 or -0.39%. The S&P 500 Index is at 5810.10, up 12.68 or +0.22% and the Nasdaq Composite is trading 18402.51, up 125.85 or +0.69%.

Tesla’s forecast of 20-30% sales growth for 2024 and a bullish outlook from CEO Elon Musk helped the Consumer Discretionary sector rise 2.7%. Tesla’s stock is poised for its best post-earnings performance since 2013, with this rally adding over $100 billion to the company’s market capitalization. Traders reacted positively to Musk’s comments about accelerating Robotaxi development and ambitious growth targets, boosting confidence in the stock’s future.

Other Sectors Falter Amid Earnings Disappointments

While Tesla boosted the Nasdaq, the S&P 500 faced pressure with nine of its 11 sectors in the red. Rising Treasury yields and disappointing earnings from several major companies tempered market optimism. The yield on the 10-year Treasury note remained elevated at 4.25%, signaling concerns about higher borrowing costs.

Among notable decliners, IBM dropped 6.5% after missing revenue estimates, and Honeywell saw its shares fall 4.3% after issuing a weak sales forecast. The Materials sector fell 1.4%, dragged down by Newmont, which missed profit estimates due to rising costs and weaker output from its Nevada operations. Boeing also slipped 2% as labor disputes continued, with factory workers rejecting a contract offer, extending a five-week strike.

Mixed Performance in Tech and Mega-Cap Stocks

While Tesla’s rise fueled gains in the Consumer Discretionary sector, other tech giants experienced mixed results. Nvidia lost 0.2%, and Apple fell 0.5%, reversing earlier gains. Meanwhile, UPS surged 5.2% after reporting better-than-expected third-quarter profits, supported by cost-cutting measures and rebounding delivery volumes. Molina Healthcare led the S&P 500 with a 22% jump, following strong earnings and revenue growth.

Overall, of the 159 S&P 500 companies that have reported earnings this season, about 78.6% have exceeded analyst expectations, but broader market momentum remains constrained by rising yields and uncertain economic conditions.

Economic Data Shows Resilience in Services, Mixed Manufacturing Results

On the economic front, the U.S. economy showed resilience in October. S&P Global’s flash PMI data revealed that business activity in the services sector expanded, while manufacturing contracted at a slower pace. The composite PMI reading came in at 55.3, slightly above expectations, signaling continued growth. Meanwhile, weekly jobless claims unexpectedly fell, highlighting the labor market’s strength.

Market Forecast: Caution as Rising Yields Continue to Pressure Stocks

Despite Tesla’s impressive rally, market conditions remain challenging due to rising Treasury yields and mixed earnings reports. The Nasdaq may see continued strength, driven by tech stocks and growth optimism, but the broader market faces headwinds from rising interest rates and weaker earnings in key sectors.

Traders should expect volatility in the short term, with opportunities to buy dips in high-growth tech stocks while remaining cautious about yield-sensitive sectors like industrials and materials.